Johnny Montilla speaks with Life Alert recruiter Vincent Pinzone (R) at the Mega Job News USA South Florida Job Fair held at Amerant Bank Arena in Sunrise, Florida on September 25, 2025.
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The U.S. economy added jobs much faster than expected in October, and the unemployment rate fell as the labor market showed unexpected strength.
Nonfarm payrolls increased by a seasonally adjusted 165,000 jobs for the month, compared with the Dow Jones estimate of 59,000, the Bureau of Labor Statistics said Friday.
The unemployment rate fell slightly to 4.1%, compared to the expected 4.2%. While the civilian labor force grew by 421,000 people, the more inclusive measure, which includes disengaged workers and those in part-time work for financial reasons, rose to 7.9%, an increase of 0.3 points.
In addition to strong employment growth in October, previous months were also revised significantly upward. The August figure was revised upward by 53,000 to 186,000, and the September figure was revised upward by 31,000 to 60,000.
Salary increases also exceeded expectations. Average hourly wages increased 0.4% over the past month and 3.1% annually, compared to estimates of 0.3% and 2.9%, respectively. The average working week remained unchanged at 34.4 hours.
“Today’s jobs report is a strong rebuttal to concerns that the economy is headed for a significant slowdown,” said Seema Shah, chief global strategist at Principal Asset Management. “Employment growth showed an unexpectedly large surprise, the unemployment rate returned to 4.1%, and job creation remained broad-based, indicating that the economy is still comfortably absorbing labor rather than being deflated by tight financial conditions.”
Employment growth was also strong, in contrast to the trend where health care accounted for most of the increase.
Professional and business services led all sectors with an increase of 70,000 jobs, followed by healthcare with 42,000 jobs. Other sectors that saw significant growth included transportation and warehousing (25,000 jobs) and manufacturing (19,000 jobs).
The report was released the same week as an election in which the economy, and inflation in particular, was the center of attention. Democrats staged a nationwide rout that gave the party control of both chambers of Congress after a massive campaign to address affordability issues.
The report comes at a critical time for the Fed as well. With inflation still above the central bank’s 2% target, central bank officials are considering whether to raise rates again in December.
Traders raised the possibility of another quarterly percentage point rate hike when the Federal Open Market Committee meets on December 8-9. Odds rose to 76.8%, according to CME Group’s FedWatch tool, which indicated only one more rate hike. The odds of another rate hike in 2027 have declined slightly in recent days following the defeat in the midterm elections and Thursday’s selloff in tech stocks.
The reaction in other markets was sluggish, and the stock market futures situation was complicated. Government bond yields generally rose.
The share of workers looking for work or already working, known as the labor force participation rate, rose slightly to 61.9%. The labor force, which had been shrinking due to demographic changes and fewer immigrants, increased by 421,000 people in October.
At the same time, the household report, which is used to calculate the unemployment rate, showed an increase of 463,000 people in work.
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